Why lumber prices will remain high Although lumber prices have recently declined, they are expected to remain relatively high for the next several years as demand for new homes far outstrips weak supply in the United States.
In mid-June, the Rosen Consulting Group published a study (“ Housing is Critical Infrastructure: Social and Economic Benefits of Building More Housing ”) carried out on behalf of the National Association of Realtors (NAR) which documents the housing shortage that plagues the American market.
Thus, from 1968 to 2000, the stock of new homes in the United States increased by an average of 1.7% per year. However, since 2001, this stock has increased by 1% on average, and only 0.7% in the last decade.
In a statement published on June 16, the NSAR underlines that this situation has resulted in the creation of an underbuilding gap since 2001 which amounts to 5.52 million. .
In short, for 20 years, the country has recorded an average construction deficit of 276,000 units per year.
"There is a strong desire for homeownership across the country, but the lack of supply prevents too many Americans from achieving this dream," laments Lawrence Yun, chief economist of NAR.
Curiously, the Rosen Consulting Group study does not dwell on the causes of these decades of divestment and under-construction in residential construction.
However, a statistic gives an idea of the phenomenon.
Construction decline in US GDP
Historically, between 1968 and 2020, the sector that includes construction and home improvement accounted for 5% of US GDP.
However, since 2008 (start of the great recession), this sector has shrunk to 3% of gross domestic product.
Whatever the cause, rebalancing the supply and demand for homes (and therefore between supply and demand for lumber) will not be easy, and will take several years, experts say.
This is the reason why Jean-Franois Samray, CEO of the Quebec Forest Industry Council (CIFQ), believes that lumber prices will remain high in the long term despite the drop observed in recent weeks.
“Added to this is the growing demand for inserting wood into non-residential construction in order to meet carbon neutrality objectives,” he underlines.
On June 18, softwood lumber in North America was selling for $ 1,325 per thousand board feet, a significant drop from June 11 to $ 1,645, according to data from the Department of Natural Resources of Canada. Canada .
The average for the past 52 weeks was $ 1,227, while the average for the last 4 weeks was $ 1,705.
Original article here: https://www.lesaffaires.com/secteurs-d-activite/immobilier/pourquoi-les-prix-du-bois-doeuvre-resteront-eleves/625797